Entertainment industry looks at galloping growth

Overseas release of films, along with that in Indian theatres, is likely to emerge as a norm next year. While making this projection, head of media and entertainment practice at Ernst & Young Farokh Balsara told FE that “more and more producers are going to go for it during 2005”.

The trend has already taken off. Around 40% of Veer Zaara’s revenue came from the overseas market this year, according to Mr Balsara. Out of the 15 movies which saw simultaneous release in local and international markets, seven performed really well. And that should be an impetus for others, too.

While the industry is cashing in on Indian movies’ popularity across international markets, desi consumption is also rising. Here’s how. Consumer spending on entertainment is expected to touch 6.5% in 2005, up from 4% now, says Mr Balsara. An upswing is likely in other segments of the media and entertainment sector as well. That includes advertising and subscription revenues on television, foreign investment flow, and even the number of IPOs.

As for FDI, launch of Disney channels is seen as the biggest story so far, besides the inflow into print media companies. In 2005, FDI is expected in the gaming segment, besides the more traditional content, distribution and print media firms, according to additional director of Ficci Siddharth Dasgupta. On the IPO front, a couple of TV and film companies are expected to be active, an industry insider says. Shringar and UTV are among the names doing the rounds. According to Mr Balsara, IPO action is likely to pick up in two areas—content/programming and print media.

Significantly, along with the overseas thrust, the film industry is also set to witness a technology boom. “Greater infusion of technology will be a definite phenomenon in 2005, be it for digital cinema, Imax format or multiplex entertainment zones,” says Ficci’s Mr Dasgupta.

Also, the vertical integration between production, distribution and exhibition of films will continue, he adds.

But it’s not all good news all through. Piracy, for example, would remain a challenge next year too. “No big Hollywood companies are likely to invest unless piracy issues are resolved,” Mr Dasgupta argues.

Also, in television, regulatory issues will continue to dominate next year. Addressability and transparency in the system will be significant too for an increase in subscription revenue, as more and more channels are launched and the ad pie shrinks, indicates an industry expert.

Agrees Pricewaterhouse Coopers leader (entertainment and media practice) Deepak Kapoor. “The industry awaits the government’s nod on recommendations on the broadcasting services by the Telecom Regulatory Authority of India (TRAI), which will pave the way for addressability,” Mr Kapoor said. As for other segments, Mr Kapoor says: “Licensing norms for FM radio are still being mulled over by the government. And the film industry is hoping for another round of rationalisation of entertainment taxes.”

While on music, look beyond CDs and cassettes, seems to be the mantra. One must focus on models like ringtone and I-tune to shore up fortunes, according to Mr Dasgupta. However, the physical delivery format will remain important in India, he admits.